Shared appreciation loan modification system and method

• US 8,543,494 B2
• Filed: 01/08/2010
• Issued: 09/24/2013
• Est. Priority Date: 01/09/2009
• Status: Active Grant

• Current Assignee: Bank of America Corp.
• Original Assignee: Bank of America Corp.
• Inventors: Morano, Thomas, Fail, Peter, O'Rorke, Kenneth, Marshall, Edna, Cicero, Allison, Shields, Randy
• Primary Examiner(s): Colbert, Ella
• Assistant Examiner(s): GREGG, MARY M
• Application Number:
  US12/684,413
• Publication Number:
  US 20100179904A1
• Time in Patent Office: 1,355 Days
• Field of Search: 705/30, 705/35, 705/38, 705/39
• US Class Current: 705/38
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof

Abstract

Embodiments of the present invention provide systems, methods, and computer program products for modifying the terms of a loan and for providing for a shared appreciation loan program. For example, in one embodiment the amount owed on an existing HELOC is split into two portions. A qualifying borrower can defer the obligation to pay interest and payments on a portion of the HELOC in exchange for sharing up to 50% of the future appreciation in the real property that serves as the underlying security for the HELOC. This mortgage plan can provide an incentive for the borrower to remain in the home since the borrower may be able to share in the appreciation of the home even if the home never appreciates beyond the full amount owed on the home, while at the same time preserving the borrower'"'"'s financial commitment rating and reducing the borrower'"'"'s monthly payment.

Claims

1. A loan modification system comprising:

a memory system comprising information stored therein about a loan on a residence, wherein the loan comprises a principal balance and payment terms, and wherein the loan is an original HELOC loan on the residence; and

a processing system operatively coupled to the memory system and configured calculate a modified loan payment schedule for a customer based on a loan modification plan and store the modified loan payment schedule in the memory system, wherein the loan modification plan comprises;

modifying the original HELOC loan on the residence, wherein modifying the original HELOC comprises;

creating new contract terms for the original HELOC loan by dividing the loan balance of the original HELOC loan into a first loan portion and a second loan portion, wherein the first loan portion is subject to payment terms of the original HELOC loan, and wherein payment on the second loan portion is deferred until termination of the new contract terms for the first loan portion of the original HELOC loan, wherein termination occurs at the sale of the residence;

receiving, at termination of the loan modification plan, a portion of appreciation of a total appreciation that occurs from a first value of the residence at a first time proximate establishment of the loan modification plan to a second value of the residence at a second time proximate termination of the loan modification plan and forgoing the second loan portion when the portion of appreciation is less than the second loan portion;

receiving, at the termination of the loan modification plan, the second loan portion and forgoing the portion of appreciation when the portion of appreciation is greater than the second loan portion; and

forgoing, at the termination of the loan modification plan, the second loan portion when the first value of the residence at the first time proximate establishment of the loan modification plan is greater than the second value of the residence at the second time proximate termination of the loan modification plan.

2. The loan modification system of claim 1, wherein the processing system is further configured to allow a user to input requirements to determine an eligibility of the customer for the loan modification plan, wherein the requirements comprise that the customer has acted in a way that will allow the mortgagee to reclaim the residence or the customer is already non-conforming to original terms.

3. The loan modification system of claim 1, wherein the processing system is further configured to allow a user to input requirements to determine an eligibility of the customer for the loan modification plan, wherein the requirements comprise that the customer'"'"'s total outstanding loans on a residence are greater than the value of the residence before entering the loan modification plan.

4. The loan modification system of claim 3, wherein a ratio of the customer'"'"'s total outstanding loans on a residence to the value of the residence before entering the loan modification plan is greater than one-hundred and ten percent.

5. The loan modification system of claim 1, wherein the processing system is further configured to allow a user to input requirements to determine an eligibility of the customer for the loan modification plan, wherein the requirements comprise that the customer has an ability to make payments on the loan.

6. The loan modification system of claim 1, wherein the processing system is further configured to allow a user to input requirements to determine the eligibility of the customer for the loan modification plan, wherein the requirements comprise that the customer'"'"'s loan-to-value ratio will meet a targeted ratio or range of ratios after entering the loan modification plan.

7. The loan modification system of claim 6, wherein the customer'"'"'s loan-to-value ratio is equal to one-hundred and ten percent after entering the loan modification plan.

8. The loan modification system of claim 1, wherein the second loan potion is not greater than fifty percent of the loan.

9. The loan modification system of claim 1, wherein a percentage of the appreciation in the value of the residence that the mortgagee is entitled to is fifty percent of the difference between the value of the residence at the time of termination minus the value of the residence at the time when the customer entered into the loan modification plan.

10. The loan modification system of claim 1, wherein the loan modification plan further comprises that the customer elects to pay the mortgagee the lesser amount of the either a percentage of the portion appreciation in the value of the residence or the second loan portion of the loan.

11. The loan modification system of claim 1, wherein the loan modification plan further comprises that the mortgagee determines the value of the residence when the loan modification plan is entered into by the customer and when termination of the loan modification plan occurs under the same valuation process.

12. The loan modification system of claim 1, wherein the loan modification plan further comprises that if the customer does not meet the terms on any loan associated with the residence, then the customer owes the mortgagee both the first portion and the section portion of the loan subject to the payment terms of the loan.

13. A method for a loan modification plan, wherein the loan modification plan is for a loan that is an original HELOC loan on a residence, the method comprising:

creating, through the use of a processor, the terms of the loan modification plan, wherein the terms comprise;

modifying the original HELOC loan on the residence, wherein modifying the original HELOC comprises;

creating new contract terms for the original HELOC loan by dividing the loan balance of the original HELOC loan into a first loan portion, wherein the first loan portion is subject to original terms of the original HELOC loan, and a second loan portion of the existing loan, wherein payments are deferred on the second loan portion until termination of the new contract terms for the first loan portion of the original HELOC loan, wherein termination occurs at the sale of the residence;

an agreement to receive, at termination of the loan modification plan, a portion of appreciation of a total appreciation that occurs from a first value of a residence at a first time proximate establishment of the loan modification plan to a second value of the residence at a second time proximate termination of the loan modification plan and forgo the second loan portion when the portion of appreciation is less than the second loan portion;

an agreement to receive, at the termination of the loan modification plan, the second loan portion and forgo the portion of appreciation when the portion of appreciation is greater than the second loan portion; and

an agreement to forgo, at the termination of the loan modification plan, the second loan portion when the first value of the residence at the first time proximate establishment of the loan modification plan is greater than the second value of the residence at the second time proximate termination of the loan modification plan;

calculating, through the use of the processor, the loan modification plan payment schedule;

storing, through the use of the processor, the terms and the payment schedule of the loan modification plan.

14. The method of claim 13, further comprising:

receiving, through the use of a processor, customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer has acted in a way that will allow the mortgagee to reclaim the residence or the customer is already non-conforming to original terms.

15. The method of claim 13, further comprising:

receiving, through the use of a processor, customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer'"'"'s total outstanding loans on a residence are greater than the value of the residence before entering the loan modification plan.

16. The method of claim 15, wherein a ratio of the customer'"'"'s total outstanding loans on a residence to the value of the residence before entering the loan modification plan is greater than one-hundred and ten percent.

17. The method of claim 13, further comprising:

receiving, through the use of a processor, customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer has an ability to make payments on the loan, but is unwilling to do so.

18. The method of claim 13, further comprising:

receiving, through the use of a processor, customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer'"'"'s loan-to-value ratio will meet a targeted ratio or range of ratios after entering the loan modification plan.

19. The method of claim 18, wherein the customer'"'"'s loan-to-value ratio is equal to one-hundred and ten percent after entering the loan modification plan.

20. The method of claim 13, wherein the second potion of the loan is not greater than fifty percent of the loan.

21. The method of claim 13, wherein the percentage of future appreciation in the value of the residence that the mortgagee is entitled to is fifty percent of the difference between the value of the residence at the time of termination minus the value of the residence at the time when the customer entered into the loan modification plan.

22. The method of claim 13, wherein the terms of the loan modification plan further comprise that the customer elects to pay the mortgagee the lesser amount of the either the percentage of future appreciation in the value of the residence or the second loan portion of the loan.

23. The method of claim 13, wherein the terms of the loan modification plan further comprise that the mortgagee determines the value of the residence when the loan modification plan is entered into by the customer and when termination of the loan modification plan occurs under the same valuation process.

24. A computer program product comprising a computer-readable medium having computer-readable program code portions embodied therein, the computer-readable program code portions comprising:

a first executable portion configured for creating terms of a loan modification plan, wherein the loan modification plan is for a loan that is an original HELOC loan on a residence, wherein the terms comprise;

modifying the original HELOC loan on the residence, wherein modifying the original HELOC comprises;

creating new contract terms for the original HELOC loan by dividing the loan balance of the original HELOC loan into a first loan portion, wherein the first loan portion is subject to original terms of the original HELOC loan, and;

a second loan portion, wherein payments are deferred on the second loan portion, until termination of the new contract terms for the first loan portion of the original HELOC loan, wherein termination occurs at the sale of the residence;

an agreement to receive, at termination of the loan modification plan, a portion of appreciation of a total appreciation that occurs from a first value of a residence at a first time proximate establishment of the loan modification plan to a second value of the residence at a second time proximate termination of the loan modification plan and forgo the second loan portion when the portion of appreciation is less than the second loan portion;

an agreement to receive, at the termination of the loan modification plan, the second loan portion and forgo the portion of appreciation when the portion of appreciation is greater than the second loan portion; and

an agreement to forgo, at the termination of the loan modification plan, the second loan portion when the first value of the residence at the first time proximate establishment of the loan modification plan is greater than the second value of the residence at the second time proximate termination of the loan modification plan;

a second executable portion configured for calculating the loan modification plan payment schedule; and

a third executable portion configured for storing the terms and the payment schedule of the loan modification plan.

25. The computer program product of claim 24, further comprising:

an executable portion configured for receiving customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer has acted in a way that will allow the mortgagee to reclaim the property or the customer is already non-conforming to original terms.

26. The computer program product of claim 24, further comprising:

an executable portion configured for receiving customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer'"'"'s total outstanding loans on a residence are greater than the value of the residence before entering the loan modification plan.

27. The computer program product of claim 26, wherein a ratio of the customer'"'"'s total outstanding loans on a residence to the value of the residence before entering the loan modification plan is greater than one-hundred and ten percent.

28. The computer program product of claim 24, further comprising:

an executable portion configured for receiving customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer has an ability to make payments on the loan, but is unwilling to do so.

29. The computer program product of claim 24, further comprising:

an executable portion configured for receiving customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer'"'"'s loan-to-value ratio will meet a targeted ratio or range of ratios after entering the loan modification plan.

30. The computer program product of claim 29, wherein the customer'"'"'s loan-to-value ratio is equal to one-hundred and ten percent after entering the loan modification plan.

31. The computer program product of claim 30, wherein the second potion of the loan is not greater than fifty percent of the loan.

32. The computer program product of claim 24, wherein the percentage of future appreciation in the value of the residence that the mortgagee is entitled to is fifty percent of the difference between the value of the residence at the time of termination minus the value of the residence at the time when the customer entered into the loan modification plan.

33. The computer program product of claim 24, wherein the terms of the loan modification plan further comprise that the customer elects to pay the mortgagee the lesser amount of the either the percentage of future appreciation in the value of the residence or the second loan portion of the loan.

34. The computer program product of claim 24, wherein the terms of the loan modification plan further comprise that the mortgagee determines the value of the residence when the loan modification plan is entered into by the customer and when termination of the loan modification plan occurs under the same valuation process.

35. The computer program product of claim 24, wherein the terms of the loan modification plan further comprise that if the customer fails to meet the terms on any loan associated with the residence the customer owes the mortgagee both the first portion and the section portion of the loan subject to the original terms of the loan.

36. An apparatus comprising:

a memory device having computer readable program code store thereon; and

a processing device operatively coupled to the memory device, and the communication device, wherein the processing device is configured to execute the computer readable program code to;

create the terms of a loan modification plan, wherein the loan modification plan is for a loan that is an original HELOC loan on a residence, wherein the terms comprise;

modifying the original HELOC loan on the residence, wherein modifying the original HELOC comprises;

creating new contract terms for the original HELOC loan by dividing the loan balance of the original HELOC loan into a first loan portion of an existing loan on collateral, wherein the first loan portion is subject to original terms of the original HELOC loan, and existing loan;

a second loan portion of the existing loan, wherein payments are deferred on the second loan portion until termination of the new contract terms for the first loan portion of the original HELOC loan, wherein termination occurs at the sale of the residence;

an agreement to receive, at termination of the loan modification plan, a portion of appreciation of a total appreciation that occurs from a first value of the collateral at a first time proximate establishment of the loan modification plan to a second value of the collateral at a second time proximate termination of the loan modification plan and forgo the second loan portion when the portion of appreciation is less than the second loan portion;

an agreement to receive, at the termination of the loan modification plan, the second loan portion and forgo the portion of appreciation when the portion of appreciation is greater than the second loan portion; and

an agreement to forgo, at the termination of the loan modification plan, the second loan portion when the first value of the collateral at the first time proximate establishment of the loan modification plan is greater than the second value of the collateral at the second time proximate termination of the loan modification plan;

calculate the loan modification plan payment schedule; and

store the terms and the payment schedule of the loan modification plan.